A neighbor’s fence cuts into the seller’s lot. Asthe listing agent, should I disclose that?

Article 2 of the Code of Ethics requires REALTORS® to avoid “exaggeration, misrepresenta-tion, or concealment of pertinent factsrelating to the property or the transac-tion. REALTORS® shall not, however, beobligated to discover latent defects inthe property.”The Code of Ethics and ArbitrationManual discusses “pertinent” facts: “Ab-sent a legal prohibition, any material factthat could a;ect a reasonable purchas-er’s decision to purchase, or the pricethat a purchaser might pay, should bedisclosed . . . if known by the REALTOR®.”Included in the concept of pertinentfacts is a fact that may a;ect “thepotential purchaser’s ability to resellthe property at a future date.” Theencroachment of the neighbor’s fenceonto the property of the listing clearlymay a;ect what a reasonable buyermay decide to purchase in that thetitle to the property has some “flaw”or “cloud.” The encroachment mayalso a;ect the buyer’s ability to sellthe property in the future unless theencroachment is resolved.

Unless the seller can work with the
neighbor to resolve the problem, that
encroachment is likely a pertinent fact
that should be disclosed to a prospective
buyer. Most likely this sort of encroachment would also be required to be
disclosed on a seller’s disclosure statement, whether the disclosure statement
is required by law or by practice. Even if
the encroachment is considered “minor,”
it may still be considered pertinent by a
hearing panel in an ethics complaint. As
in any question of disclosure, the best
practice to stay within the Code is “when
in doubt, disclose.”

Have a dilemma? Send your ethics
questions to ethics@realtors.org.

Bruce Aydt, ABR, CRB,
is the senior vice
president and general
counsel for Prudential
Alliance, REALTORS®,
in St. Louis.

ing the ruling in the state’s Supreme
Judicial Court; the appeal is scheduled
to be heard in the fall. The Massachusetts Association of REALTORS® and
the Greater Boston Real Estate Board
are preparing a brief in support of the
brokers. “We will clearly explain why
it would be unfair and inconsistent
with the legislature’s intent to permit
this type of misclassification claim to
proceed in the real estate industry,”
says William G. Mullen III, legal counsel
and director of risk management for
the Greater Boston Association of
REALTORS®.

Peter Ru;ni, president of the
Massachusetts Association of
REALTORS®, agrees with the necessity
of keeping the status quo. “It’s vital to
the real estate industry that brokers
and agents continue to have the ability
to a;liate as independent contractors
or as employees,” he says.

The two California cases, Cruz v.
Redfin Corp. in Alameda County Superior Court and Bararsani v. Coldwell
Banker Residential Brokerage in Los
Angeles Superior Court, have not
yet gone to trial. They were both filed
late last year and are seeking class
certification. “If these cases are found
in favor of the plainti;s, in states where
there are conflicts between real estate
and employment laws, that could propel interest in lawsuits in other parts
of the country,” Walker says. “Having
an employer-employee relationship
for a broker could be more expensive,
more burdensome, and more time-consuming.”

By Robert Freedman
Lesley Walker discusses the cases in a
video interview. Find it at realtorm.ag/
IndependentContractors.